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Formation of Contact
Energy
1995 - 1996
Objective
To establish a significant competitor to
ECNZ and move toward a competitive wholesale electricity market
in New Zealand
Key steps
This was a major policy and commercial transaction,
with a complex set of processes and relationships. The essential
elements were as follows:
- Assess costs, benefits and risks of moving
toward a competitive market for electricity
- Report to Cabinet
- Analyse possible generation configurations,
including expected impacts on value, electricity prices,
security of supply, the environment, existing supply contracts,
and transmission
- Design a transitional regulatory framework
- Develop an implementation strategy
- Report to senior Ministers and obtain
Cabinet approval
- Negotiate with ECNZ, including detailed
discussions with ECNZ's financial, economic, engineering
and environmental consultants
- Consult with a broad range of interest
groups
- Draft a memorandum of understanding between
the Government and ECNZ
- Present package to industry and media
- Undertake consultation with Maori under
Crown Treaty obligations
- Negotiate sale and purchase agreement
for transfer of assets and liabilities
- Form and oversee SOE development group,
to prepare business plans for new company (Contact Energy)
- Advise Cabinet on final decisions
- Establish new board of directors
- Oversee the development of new rules
and governance body for an independent wholesale electricity
market, including related Commerce Act issues
My role
My role was to lead this project for the Government through
each of the key steps outlined above. Particular inputs included:
- Helping to design the strategy and implementation
steps
- Leading negotiations for the Government
with ECNZ at a senior management level
- Coordinating and critiquing inputs from
various government departments and a diverse range of lawyers,
merchant bankers, economists, engineers and interest groups
- Drafting and presenting key reports to
Cabinet
- Drafting the memorandum of understanding
between ECNZ and the Government
- Leading the consultation process with
Maori under the Government's Treaty obligations
- Liaising on communications strategy and
implementation
Publications
"Memorandum
of Understanding between the Government of New Zealand and
the Electricity Corporation of New Zealand", 8 June
1995 - published in the New Zealand Gazette, 22 February 1996,
Issue No.16. Tony led a small team to draft this document,
which sets out the key elements of the Government's 1995 industry
restructuring package, including the formation of Contact
Energy.
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